David Steel, left, and Roy Kline, both partners at Western Development Group, are the public face of the development of North Creek, which will feature 40,000 square feet of retail space and 50 luxury condos.

Christian Anschutz, right, owner of Western Development Group, with Joseph Poli of Humphries Poli, the project architect.

A combination of factors – including the arrival of chain-focused, high-density developments such as Clayton Lane and North Creek and escalating real estate values – are changing the face of the 16-block shopping district.

The transformation started a few years ago when local developer Randy Nichols spent $150 million to turn Clayton Street into the upscale Clayton Lane development. More than a dozen national chains, including Crate & Barrel, Orvis and Bose, dominate the project’s retail space.

Two other projects under construction by wealthy Denver businessmen – Donald Sturm and Christian Anschutz – are expected to continue that trend.

Sturm, a longtime Denver banker and philanthropist, is spending nearly $10 million to renovate the former Tattered Cover building and an adjacent office building.

Last month, he announced that the Pure Vida Fitness and Spa will take about 30,000 square feet in the old bookstore space. Sturm declined to name other incoming tenants, but defended the area’s rising lease rates.

“People who can no longer afford the property values that we have here obviously have had to leave, but you can’t keep the value down and hope that somebody can afford it,” he said. “Capitalism doesn’t work that way; our system of economics doesn’t work that way.”

More new retail coming

Cherry Creek North will also soon gain an additional 40,000 square feet of retail space in Anschutz’s $100 million North Creek development, which also features 50 luxury condos that start at $1 million.

Anschutz is the son of Denver billionaire Philip Anschutz. His company, Western Development Group, said it is negotiating with about a dozen tenants – both national and local – to occupy North Creek’s available first-floor retail space.

“Demand has been what we expected and then some,” said Western Development partner David Steel. “The demographics of this area are just perfect; we intend to buy more property here.”

Western Development has already staked a significant claim in the neighborhood. It purchased the 200 Fillmore building in 2005 and recently snapped up two other properties – 280 Columbine St. and 235 Fillmore St.

The company declined to detail its plans for the buildings.

“Because of the nature of the neighborhood, with the eclectic ownership and the size of the lots, it is very difficult to develop,” said Roy Kline, a partner at Western Development. “We’re trying to decide what to do with them; right now we’re leasing them short-term.”

One tenant Western Development could not come to a long-term lease agreement with was Mel’s Restaurant, which pulled out of 235 Fillmore St. last month.

“It’s all changing,” said restaurant owner Mel Masters. “And there is nothing wrong with change, but I don’t know if the small independent restaurants and retailers can make it because they don’t have the volume to pay the growing rents.”

Indies vanishing – or not

There are currently more than 300 businesses in Cherry Creek North, including about 65 spas and salons and more than 50 restaurants.

But concern began to mount in recent months as more than a dozen independent shops shut down. Some – like Sporting Woman, B. Bear Express and Cook’s Mart – said they were closing down for personal reasons. Others, including Mel’s and the Tattered Cover, could not secure new leases.

But Julie Bender, who took over the Cherry Creek North Business Improvement District earlier this year, stressed that independent businesses continue to thrive in the area, pointing to the arrival of several new locally owned boutiques – including Stylelicious Kids and De Stijl Clothing, which both plan to open this month.

“Independently-owned businesses are the core of this area, so it’s an odd perception to me that they’re a dying breed here,” said Bender, who was formerly the head of the DIA Partnership. “This area has a long history of great entrepreneurs; it’s just a matter of scale. They’re developing bigger buildings now.”

The Cherry Creek North Business Improvement District markets the retail district and provides other services. Last fall, it helped push through an $18 million bond issue to fund renovations in the neighborhood. Several long-time independent retailers, including the owners of Tam O’Neill Fine Arts and The Brass Bed, said they’re pleased with Bender’s vision for Cherry Creek North.

“We’re really supportive of the new leadership,” said Tam O’Neill, who last year helped form a group of about 40 stores who want to preserve the district’s eclectic nature. “We’ve raised the issue of how do independents fit into the big picture. We’re on the radar screen now.”

The Brass Bed owner Rosella Louis, who has been in the neighborhood for 30 years, said her business has never been better.

“I’m positive about the future,” she said. “I don’t think the changes are necessarily as detrimental to small business as people are thinking. The good retailers are still doing well.”

And at least one independent retailer – Andrisen Morton – has invested heavily in its store in a bid to compete with the increased national presence and October’s arrival of Nordstrom at the Cherry Creek Shopping Center. Its women’s boutique recently completed a $1.5 million renovation.

“Our posture is that you have to go big or go home,” said co-owner Dave Morton. “It’s inevitable that the district is going to change; the real estate here is just worth too much money. But I think Clayton Lane and North Creek are the two best things that have ever happened to Cherry Creek North.”

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